Issues and Options: The Potential Role of Microfinance to Expand Access to Energy Services
This paper explores how energy services and consumer lending can work together for the benefit of the poor energy consumer.
The paper states that access to modern energy services is central to reducing poverty and achieving the Millennium Development Goals. In order to develop effective programs to enable this access, it is essential to understand the energy consumer’s needs, and the issues that microfinance agencies and energy service providers face in meeting these needs. Study findings indicate that:
- Energy service providers can greatly increase access to poor and/or rural consumers if these consumers could also access credit facilities;
- Microfinance agencies could greatly increase reach of their financial services, and augment economic development opportunities by lending for energy.
The study recommends that energy service providers and microfinance agencies get into partnerships to meet the needs of the energy consumer. Examples of activities that offer obvious mutual benefit to consumers, MFIs and energy service providers include lending for productive uses of energy, sharing costs and risks, and integrating energy lending into existing financial products.
